2012 (8) TMI 139 - AT - Central Excise

Cenvat credit - electricity used outside the factory of production as well as in respect of peripheral area in the factory - demand on the ground that the appellant is liable to pay 10% on the price of electricity which is used outside the factory - Held that - Electricity is not an excisable item as per Section 3 of CEA, 1944 and the manufacturer is liable to reverse the credit on duty availed as inputs used in the generation of electricity which is not used in the factory of the production- appellant has failed to show that the same is used within the factory, therefore this issue also requires reconsideration as in the show-cause notice the allegation is that the electricity is used in the peripheral area within factory gate - matter is remanded to the Commissioner

Summary

Issues involved:
Application for waiver of total demand of duty, interest, and penalties based on the denial of credit on common inputs used in the production of LPG and electricity generation.

Analysis:

1. Denial of credit on common inputs:
The appellant filed applications seeking waiver of total demand of duty, interest, and penalties due to the denial of credit on common inputs used in the production of LPG. The Revenue contended that since the appellant availed credit of duty paid on common inputs, they are liable to pay 10% of the price of Nitrogen used for degassing of wagons. The appellant argued that since they were clearing the final exempted product, the demand in respect of Nitrogen used for degassing of wagons is not sustainable, citing a previous decision. The Tribunal found that the appellant is reversing credit in respect of inputs used in the manufacture of LPG and Nitrogen, and remanded the matter for reconsideration by the adjudicating authority.

2. Demand on electricity generation:
Regarding the demand on electricity generation, the appellant contended that the demand of 10% on the value of electricity going outside the factory is not sustainable as electricity is not an exempted final product. The appellant also argued that since they procured duty-free inputs for electricity generation used outside the factory, the demand is not sustainable. The Tribunal referred to decisions by the Hon'ble Supreme Court and found that the issue is settled, directing the adjudicating authority to reconsider the demand in light of the Supreme Court's decisions.

3. Electricity used in the peripheral area:
In the case of electricity used in the peripheral area within the factory, the appellant argued that the demand is not sustainable as the electricity was used for peripheral activities within the factory. The Tribunal noted discrepancies between the show-cause notice and the adjudicating authority's findings, remanding the issue for reconsideration.

Conclusion:
The Tribunal set aside the impugned orders, waived the pre-deposit of duty, interest, and penalty, and remanded the matter to the Commissioner of Central Excise for fresh consideration after providing an opportunity of hearing to the appellant. The appeals were disposed of by way of remand, emphasizing the need for reconsideration by the adjudicating authority.